Japan: External sector remains weak in August
September 20, 2012
In August, exports contracted 5.8% over the same month last year. Albeit still a contraction, the decline represents an improvement over both the 8.1% drop seen in July and market expectations that had exports decreasing 7.5%. Simultaneously, imports fell 5.4% in August, contrasting the 2.1% rise tallied in the previous month. In fact, the August reading marked the largest drop recorded since December 2009. As a result, the trade balance registered a deficit of JPY 754 billion (USD 9.6 billion), which virtually mirrored the JPY 777 billion shortfall recorded in the same month last year. That said, the print overshot market expectations of a JPY 829 billion deficit. Exports remain dampened by lower shipments to the European Union and China, amid cooling global demand. On the other hand, purchases of mineral fuels recorded their first annual drop since December 2009, as Japan restarted two nuclear power plants in July. Meanwhile, on 14 September, the government announced its intention to abandon nuclear power by the 2030's.